NFON AG — Earnings Release 2023

Nov 23, 2023

Earnings Call

9M Results 2023 – 23 November 2023

Agenda for today

01 Highlights 9M 2023

02 Financial figures 9M 2023

03 Outlook

2023

04 Q&A session

Highlights

9M 2023

NFON 2025 + Strategy for continous and sustainably profitable growth

OUR OBJECTIVE:

Sustainably profitable corporate development

THE FOUNDATION: Operational excellence

Earnings Call 9M 2023 - 23 November 2023 5

Financial figures

9M 2023

9M 2023 results at a glance

Continuously growing share of recurring revenue

Development of total recurring vs. non-recurring revenue in EUR million

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

• § Recurring revenue grew by 5.1% compared with 9M 2022
  • acquisition of new customers
  • increase in installed extensions (seats) within the existing customer base
• § Total revenue growth of 2.1% in comparison with 9M 2022 due to decrease of non-recurring revenue by 28.1% compared with previous 9M
• § Enhanced high share of recurring revenue in total revenue of 93.6% provides predictable revenue streams

Reliable high gross margin again with increasingly positive development

Development of COGS (adj.)1 in EUR million and gross margin2

COMMENTS

• § Improved gross margin compared with the same period last year due to successfully growing share of high-margin sales
• § Cost of materials is largely variable in nature and mainly comprises costs for hardware sold, costs for airtime sold and data centre housing costs
• § Despite an increase in sales, cost of materials fell by 9.6% in the reporting period
• § This again results in a low material cost ratio of 15.9% compared with the same period of the previous year (9M 2022: 17.9%)

2Gross margin defined as (revenue - adj. cost of materials)/ revenue

Reduced personnel expenses in line with strategic focus

Adjusted personnel expenses in EUR million

² Measures implemented primarily in the fourth quarter of the previous year to create the profitable further growth of the NFON Group

• § Average number2 of employees decreased from Ø 506 to Ø 444 (-14.0%)
• § Personnel expenses as reported amount to EUR 26.3 million (9M 2022: EUR 28.7 million)
• § Adjustments:
  • EUR 0.0 million for stock options (9M 2022: EUR 0.5 million)
  • EUR 0.1 million realignment of Group-wide activities (9M 2022: EUR 0.2 million).
  • EUR 0.9 million incurred in connection with the reorganisation of top management (9M 2022: EUR 0.0 million).
• § Adjusted personnel expense ratio of 41.0% (9M 2022: 46.1%) expected to decrease further in the course of 2023 due to scaling effects.

EBITDA

• § Measures to increase profitability taking effect
• § Significant reduction in marketing and headcount expenses

Detailed reconciliation of one-off items

Reconciliation from EBITDA to adjusted EBITDA1	9M 2023	9M 2022
EUR million
EBITDA	4.7	-4.7
Stock options	0.0	0.5
Focus on core markets	0.1	0.2
Reorganisation of top management	0.9	0.0
M&A acitivities	0.0	1.3
Rebranding	0.0	0.9
Administrative expenses	0.2	0.0
Total EBITDA adjustments	1.2	3.9
Adjusted EBITDA	6.0	-0.8

1 Rounding differences are possible

Outlook

2023

Raised guidance for continuous sustainably profitable growth

	2021 20232020 2022
Recurring revenue growth	We expect recurring revenue growth in the mid to upper single-digit percentage range
Recurring revenue share	We expect a resulting recurring revenue ratio of >88%	Raised
Adjusted EBITDA	We expect adjusted EBITDA to be in the range of EUR 6-7 million EUR 7.8 million to EUR 8.3 million	guidance: § Positive business development to date § Continuing positive
		outlook for Q4

Q&A session

Appendix

9M 2023

Seat growth in line with strategic focus

Development of number of seats ('000) and ARPU

• § Increase in total number of seats by 3.7%
• § ARPU development: 9M 2023 stable at year-end level. Slight decline versus 9M 2022
• § Continued low gross churn rate of ~0.6% per month underlines quality of product and service and guarantees continuous recurring revenue
  • Slight increase in the rate compared with the prior-year period as a result of a planned post-contract churn of a major customer
• § Our innovative, automated and userfriendly omnichannel solution Contact Center Hub has been developing positively since its launch at the beginning of 2023.

Decrease in marketing expenses as planned

Marketing expenses in EUR million

• § Marketing expenses decreased by 50.8% yoy
• § Focused and efficient marketing where we see market potential. Channel marketing moves to the fore.

Selling cost slightly higher compared with 9M 2022

Selling expenses in EUR million

• § Selling expenses mainly include sales commissions to dealers and distributors (excluding wholesale partners)
  • Dealers and distributors only receive a percentage share of revenue per seat
• § Increase in sales commissions by 8.9% yoy
• § Overall selling cost might continue to rise slowly mainly as a result of a channel shift from direct business to the commissionbased partner channels
• § No further significant changes are expected

Share at a glance

ISIN	DE000A0N4N52
Segment	Prime Standard/ Telecommunication
Shares	16.6 million (29 March 2021)
Designated sponsors	Baader Bank ODDO Seydler
First day of trading	11 May 2018
Coverage	Berenberg Bank, Baader Bank, Hauck & Aufhäuser, ODDO

Shareholder structure* in %, as of 22 November 2023

C-levelteam

Patrik Heider CEO / CFO

• § At NFON since 2023
• § ~20 years of C-level experience and in the IT industry
• § Previous experience includes
  • Nemetschek SE
  • Thinkproject
  • riskmethods

Gernot Hofstetter CCO

• § At NFON since 2018
• § Previous position:
  • MD Austria and Europe (CEE)
• § > 20 years of experience, working as MD and Sales Manager for several telecom companies in Austria

§ At NFON since 2015

• Managing Director for NFON

Developments Lda.

§ Previous position:

Markus Krammer CPO

-

• Central and Eastern
  • § > 20 years of experience in senior executive positions within the telco industry

Merano Mettbach CSO (Germany)

• § At NFON since 1 September 2023
  • § > 20 years of senior executive experience within the telco industry
• § Previous experience includes
  • Cisco Systems
  • BroadSoft
  • Vodafone

Heinke Bock CPCO

• § At NFON since 2018
• § Previous position:
  • VP HR
• § > 20 years of experience in leading positions within HR and Legal Counseling

Deniz Beskök CTO (interim)

• § At NFON since 2007
• § Previous position:
  • VP Engineering and Agile Transition
• § > 20 years of experience within the IT /telco industry and has held various key positions

Financial calendar

20 24 07/03

25/04

23/05

• Group annual report FY 2023

• Preliminary group financial results FY 2023

• Financial results 3M/Q1 2024

28/06

• Annual General Meeting 2024

22/08

• Group half -year report 2024

21/11

• Financial results 9M/Q3 2024

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FRIEDERIKE THYSSEN Investor Relations & ESG

Machtlfinger Straße 7 81379 Munich, Germany NFON AG Machtlfinger Strasse 7 81379 Munich, Germany

NFON AG

Phone: +49 (0) 89 453 00 449 ir-info@nfon.com

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Disclaimer

This publication contains forward-looking statements regarding NFON AG ("NFON") or the NFON Group and its subsidiaries, including assessments, estimates and forecasts regarding the financial position, business strategy, plans and objectives of management and future operations of NFON and the NFON Group. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the results of operations, profitability, performance or results of NFON or the NFON Group to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are made as of the date of this press release and are based on numerous assumptions that may prove to be incorrect.

c NFON makes no representations and assumes no liability with regard to the proper presentation, completeness, correctness, appropriateness or accuracy of the information and assessments contained herein. The information contained in this press release is subject to change without notice. It may be incomplete or abbreviated and may not contain all material information relating to NFON or the NFON Group. NFON assumes no obligation to publicly update or revise any forward-looking statements or other information contained herein, whether as a result of new information, future events or otherwise. This press release is not an offer to buy or subscribe for securities and should not be construed as a basis for investment decisions in NFON or the NFON Group, in whole or in part.

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